Supply Review – Flashcards
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Why would the supply curve of a dog walking business be considered elastic?
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because it can hire workers quickly if the price rises
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If supply is elastic
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it reacts strongly to changes in price.
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What is needed to create a supply schedule for a fruit smoothie shop?
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the price charged and the number of smoothies supplied
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What is a supply curve?
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a graph of the quantity supplied of a good at different prices
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What is the tendency of suppliers to offer more of a good at a higher price?
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law of supply
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What is a market supply schedule?
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a chart that lists how much of a good all suppliers will offer at different prices
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What factor might lead to the opening of several new pizzerias in a town?
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The price of a slice of pizza has gone up.
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Any factor that can change is
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a variable.
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A raise in the price of a product
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increases competition.
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The measure of the way quantity supplied reacts to a change in price is
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elasticity of supply.
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The cost of producing one more unit of a good is known as a(n)
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marginal cost.
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A cost that rises or falls depending on how much is produced is a(n)
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variable cost.
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If the total cost of producing 300 leather jackets is $400 and the total cost of producing 301 leather jackets is $435, what is the marginal cost of production at 300 leather jackets?
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$35
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What is the level of output every firm strives for?
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when marginal revenue equals marginal cost
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The additional income from selling one more unit of a good, sometimes equal to price, is
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marginal revenue.
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What does the beanbag factory experience when the number of workers is increased from 2 to 3?
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increasing marginal returns
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Total cost is
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fixed costs plus variable costs.
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If the fixed cost of producing video games is $14, and the variable cost of producing seven video games is $12, how much is the total cost of producing seven video games?
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$26
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A cost that does not change, no matter how much of a good is produced is a(n)
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fixed cost.
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How does a firm calculate its profit?
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total revenue minus total cost
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Government intervention in a market that affects the production of a good is
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regulation.
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Which of the following is a way entrepreneurs influence supply?
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technology
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A tax on the production or sale of a good is called
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an excise tax.
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What is a negative effect of the U.S. farm subsidies that pay farmers to take land out of cultivation?
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Farmers use more pesticides on lands they do cultivate to make up for lost production.
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What happens to supply when input costs go up?
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It decreases because the good becomes more expensive to produce.
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A government payment that supports a business or market is
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a subsidy.
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If a firm's product is perishable, where is the firm usually located?
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near its consumers
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New advances in technology usually
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all of the above.
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Which of the following will always cause a supply curve to shift to the left?
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excise taxes
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Why would a farmer store his or her soybeans for future sale instead of selling them right after harvest?
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Inflation is running at 25 percent.
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Which of the following leads to an increase in supply?
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a decrease in the cost of raw materials
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If sellers expect the price of a good to rise in the future, they are likely to
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store goods now and sell more in the future.
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Which of the following is an example of a variable cost?
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raw materials
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A market supply curve shows
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the quantity supplied by producers at different prices.
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The change in output from adding one more worker is called
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the marginal product of labor.
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A subsidy is
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a government payment to support a business or market.
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The key factor that determines whether the supply of a good will be elastic or inelastic is
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time.
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____________ is a measure of the way suppliers respond to a change in price.
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Elasticity of supply
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According to the law of supply,
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the higher the price, the greater the quantity produced.
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A producer's profits are maximized when marginal costs
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are equal to marginal revenue.
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Which of the following is NOT a fixed cost?
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electricity
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When a business is calculating its operating costs, it must include
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variable costs.
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The law of supply describes the relationship between
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price and quantity supplied.
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The supply curve
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always rises from left to right.
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If the market price for a beanbag is $24, and the marginal cost for the beanbag is $7, the marginal revenue from the beanbag would be
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$24.
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Marginal cost is
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the cost of producing one more unit of a good.
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Advances in technology usually
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lower costs and increase supply at all price levels.
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When a percentage change in price is perfectly matched by an equal percentage change in quantity supplied, elasticity is exactly one, and supply is
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unitary elastic.
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Which of the following products is likely to have a built-in excise tax?
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high-pollutant gasoline
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Which of the following products is likely to have a built-in excise tax?
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high-pollutant gasoline
